METALS-Copper steady as Fed assurance offsets demand concerns

Reuters Staff

3 Min Read

* China to achieve 7.5 pct growth target this year - poll

* Dollar drops against euro and basket of currencies

* Coming up: G20 finance ministers meeting

By Harpreet Bhal

LONDON, July 19 (Reuters) - Copper was steady on Friday, propped up by a weak dollar and reassurance that the U.S. Federal Reserve would be flexible in scaling back stimulus measures, but capped by concern over demand.

Three-month copper on the London Metal Exchange closed at $6,915 a tonne, not far from a last bid of $6,900 on Thursday.

Copper prices drew support from Fed chairman Ben Bernanke’s testimony before Congress this week in which he reiterated that the central bank would only start phasing out its stimulus once it was sure the economy is strong enough to stand on its own.

The ultra-loose monetary policy adopted by central banks around the world to boost growth in the last few years has helped prices of commodities as an alternative to interest-bearing investment assets.

“Although the market was reassured by Bernanke, there remains a lot of question marks about the outlook for growth from China,” said Nic Brown, head of commodities research at Natixis.

“Until the market gets more reassurance on that, there will continue to be caution.”

China will hit its growth target of 7.5 percent this year, although it is unlikely to gain traction next year as the government trades short-term growth for long-awaited reforms, a Reuters poll showed.

“When you look at China, there’s not really any indication that you could see demand accelerating without fresh stimulus which is unlikely to be the case. Given oversupply, we have to consider copper prices falling back to $6,300 in the second half,” said Dominic Schnider of UBS Wealth Management in Singapore.

The weaker dollar helped keep the metal in positive territory, because it makes commodities priced in the U.S. unit cheaper for holders of other currencies.

In other metals, nickel closed at $14,160 per tonne from $14,000 at the close on Thursday, tin at $19,400 from $19,545, lead at $2,033 from $2,036.50, and aluminium at $1,824 from from $1,805.